Free Writing Prospectus
To Preliminary Prospectus dated March 14, 2012
Filed pursuant to Rule 433
Registration Statement No. 333-179839
Dated March 15, 2012
Rebirth: Innovations
Michiel Herkemij CEO
Ingrid Baron CMO
Disclaimer
DE International Holdings B.V. has filed a registration statement (including a prospectus) with the U.S. Securities and Exchange Commission (SEC) for the offering to which this communication relates. You should read the prospectus in that registration statement and other documents DE International Holdings B.V. has filed with the SEC for more complete information about DE International Holdings B.V. and this offering. You may get these documents for free by visiting EDGAR on the SEC website at
ov. Alternatively, you can obtain a copy of the prospectus by writing to DE International Holdings at: DE International Holdings, Attn: Investor Relations, Vleutensevaart 100, Utrecht, 3532 AD, The Netherlands or by sending an email to offeeteaco@saralee.com
These materials do not constitute an offer to acquire securities or a prospectus within the meaning of the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht). In connection with the admission to trading on NYSE Euronext in Amsterdam, a prospectus approved by the Netherlands Authority for the Financial Markets (Stichting Autoriteit Financiele Markten or AFM) will be made generally available in The Netherlands. Any investor should make his investment decision solely on the basis of the information contained in the prospectus. When made generally available, copies of the AFM-approved prospectus may be obtained at no cost by writing to DE International Holdings at: DE International Holdings, Attn: Investor Relations, Vleutensevaart 100, Utrecht, 3532 AD, The Netherlands or by sending an email to offeeteaco@saralee.com
Some of the information presented herein contains forward-looking statements. All statements other than statements of historical fact regarding our business, financial condition, results of operations and certain of our plans, objectives, assumptions, projections, expectations or beliefs with respect to these items and statements regarding other future events or prospects, are forward-looking statements. These statements include, without limitation, those concerning: the anticipated costs and benefits of restructuring actions taken to prepare for the separation; our ability to complete the separation; the timetable for completion of the separation; the expected benefits of the separation; CoffeeCos ability to declare and pay the CoffeeCo Special Dividend; our access to credit markets; and the funding of pension plans. These statements may be preceded by terms such as expects, anticipates, projects or believes.
In addition, this presentation may include forward-looking statements relating to our potential exposure to various types of market risks, such as commodity price risks, foreign exchange rate risks, interest rate risks and other risks related to financial assets and liabilities. We have based these forward-looking statements on our managements current view with respect to future events and financial performance. These forward-looking statements are based on currently available competitive, financial and economic data, as well as managements views and assumptions regarding future events, and are inherently uncertain. Although we believe that the estimates reflected in the forward-looking statements are reasonable, such estimates may prove to be incorrect. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, among other things, those listed in the section of the prospectus entitled Risk Factors.
We urge you to read the sections of the prospectus entitled Risk Factors, Operating and Financial Review, Industry Overview and Business for a discussion of the factors that could affect our future performance and the industry in which we operate. Additionally, new risk factors can emerge from time to time, and it is not possible for us to predict all such risk factors. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results.
All forward-looking statements included herein are based on information available to us on the date of this presentation. We undertake no obligation to update publicly or revise any forward-looking statement in this presentation, whether as a result of new information, future events or otherwise, except as may be required by applicable law. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout the prospectus.
2 |
Creating the Senseo Sensation
Source: Company analysis based on Euromonitor, Nielsen and company estimates 4
Single Serve is the Fastest Growing
Segment in Coffee
Estimated world single serve sales (in € bn)
Estimated world single serve volumes (in mln ton)
CAGR +30%
CAGR+25%
2006 2011 2006 2011
5.4
1.6
191
64
Estimated company shares global single serve market (in %)
Others Private Labels
MASTER
BLENDERS Nestle
Source: Company analysis based on Euromonitor, Nielsen and company estimates 5
Senseo Today
11 years in the market
€ 400 mln business
95% of sales in 4 key countries (NL, B, F, D)
Successfully launched in Spain in 2009
Market shares (NL-B-F-D)
Other
Private
Labels
MASTER
BLENDERS
1753
Source: Nielsen, retail sales CY11, additional company estimate 7
Four Main Appliance Platforms
MASTER
BLENDERS
TQSSIMO
Senseo Dominates Appliance Sales
in Key Markets
Appliance sales (NL, B, F, D)
Nespresso
Dolce Gusto
Senseo
Tassimo
Source: GfK, CY10
Senseo Outsells the Other Appliance Platforms in Its Key Markets
Annual appliances sales single serve (in mln units)
Senseo Tassimo Dolce Gusto Nespresso
Source: GfK, 2010, NL-B-F-D
26 mln Senseo Machines Being Used
Senseo installed base (in mln units, excl. US)
CY01 CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11
Source: Company data
Solid 4-Year Sales Growth
Retail sales growth Senseo (1)
FY08 FY09 FY10 FY11
(1) |
Indexed FY 08 = 100, retail ales Source: Company data |
Solid Brand KPIs
Brand KPIsThe Netherlands
Awareness Consideration Current buyer Committed buyer
Consumers Value Senseo for its Simplicity and Convenience
Drivers of preference (% of consumers)
Simplicity
Convenience
Senseo
Other Looks
Passion Variety
Product
Simplicity Convenience
Nespresso
Dolce
Looks
Source: U&A Research NL 2009
Summary
We are fortunate to play in the growth market
We are solid but not fully participating in the growth
Large user base
Leadership position in single serve machines
Positive brand imagery
Strong market position, with potential to take back from PL
15
Insights For Future Growth
We Can Broaden our Purchase Appeal
Beyond Convenience
Main purchase driver (% of consumers)
Convenience (42%)
Looks (42%)
Product (28%)
Senseo
Dolce Gusto
Nespresso
Source: U&A Research NL 2009
We Have an Opportunity to Build Milk as a Consumption Partner
Share of milk in total cups consumed and Senseo sales (in %)
Germany France Netherlands Belgium
% cups consumed with milk
% Senseo sales with milk
Source: U&A survey program, Synovate 2009/2011
We Can Build Consumer Loyalty
Through Sampling
Example: in Germany 50% increase in loyalty
Source: Company data
We Must Accelerate our Innovation Rate
2001
2011
Senseo Strategy: Creating the Future
Re-Launch The Senseo Brand Aggressively
Institutionalize regular appliance innovation
Strengthen brand through:
Improved differentiation
Segmentation
Expansion to new countries
Senseo as master brand for aM high-tech offers
22
Strengthen the Brand
Upgrade taste quality and experience
Introduce more varieties
Premiumize offering
Provide specific offers for defined consumer segments
Focus investments behind innovations
Brick Pack: Brings Basic R&G into the 21st Century with Modernity, Style, Variety
LOR: Makes Range More Competitive by Moving Upscale with Improved Variety
Senseo: Aesthetic Captures Brand Essence of Simplicity and Elegance
Senseo Base: Upgraded for Better Taste
While Retaining Simplicity
Senseo Black: Designed for More Sophisticated Tastes and Palates
Senseo Milk: Only 1 Pad Solution
Patented Technology
Sarista: Machine/Bean System is Ownable, Flexible, Accessible
Sarista Beans: Offer Freshness, High Quality and Convenience
R&D: Creating the Future
Jos Sluys
VP Research & Development
We Have Organized Ourselves for Growth
125 people with a passion for Coffee & Tea
12 nationalities
Deliver innovations (90 people)
Integrated in category business teams
Resource deployment in line with business needs
Project driven and results oriented
We Have Organized Ourselves for Growth
Leading technology platforms (35 people)
Exceptional technical and scientific expertise
Entrepreneurial and external oriented
Aggressive patent strategy
Leverage innovations synergistically across categories
34
Way of Working
Flexible
Focused
Fast
Flexible by Working with the Best
Science partners
Global innovators
Integrated suppliers
Strategic alliances
? Build knowledge
? Explore new technologies Generate new innovations
? Reduce cost ?Fast implementation
? Route-to-market
Focus on Key Competences
Consumer science
Sensorial profiling (preference mapping)
Technology platforms
Liquid roast Appliances Aroma and taste Innovative packaging
We Have a Unique Liquid Roast Platform
Pure, liquid coffee concentrate
50 years of continuous development
High quality coffee, Barista standard
Difficult to replicate, delicate product, sensitive to degradation
Proprietary technology
Packing
Freezing
Roast & Ground
Extracting
Concentrating
Recent Breakthrough: Ambient Liquid
Roast
New aroma preservation technology Maintaining pure coffee character Product stable at ambient temperature
Providing access to ambient distribution channels
Enabling future innovations building upon high quality and versatility of the liquid format
Inventing the Future Senseo Sarista
Consumer insights:
Aroma is key
Fresh beans give the best coffee experience
Varying consumer preferences
Current systems
ln-cup quality suboptimal
Cumbersome and expensive
Develop proprietary system that
maximizes freshness
Sarista Challenge:
Our inventions (1) Bean packs
Clicked onto appliance
Top quality beans
Stored under nitrogen Precise measuring Cup-by-cup dosing
Maximum Freshness
41
Sarista Challenge: Maximum Freshness
Our inventions (2) Non-contamination grinder
Cup-by-cup grinding
Optimal grind size
Full discharge of ground coffee
Sarista Challenge: Making it
Non-Refillable
Bean pack recognition
Countdown mechanism
Dosing falls into disuse
Proprietary system further developed with our domestic appliance partner Philips
43
Delivering Coffee-Milk Solutions:
Senseo
Consumer insights:
Perfect cappuccino and cafe latte at home
Simple and easy to prepare
Variation
No 1-step single serve solutions on the market Develop proprietary pads, technically solving:
Low milk powder solubility and dissolving rate
Clogging of systems due to coffee-milk interaction
_14
Design honeycomb-filter combination
Swirling motion inside pad at multiple, specific places
High dissolving rate, clogging avoided
Delivers high flexibility of innovations in flavored cappuccinos
Our Proprietary Solution: One-Step
Cappuccino
Fast to Market with Innovations
Conventional stage gating innovation process
Opportunity Concept
Prototype
Technical Supplier solution selection
mplementation
Long time-to-market
Risks and failures saved for last
Fast to Market with Innovations
Our approach
Get Inspired Go create
Make it happen
Twice as fast in market
LOr Espresso Lungo range (4 months)
R&G new brick product range (6 months)
New Senseo product range (Q3 12) (9 months)
Strong Number 2 Position in Coffee Patent Applications
First filings (2006July 2010)
250 200 150 100 50
Comp 1
MASTER Comp 2 Comp 3 Comp 4 Comp 5
BLENDERS
Number of Patent applications increased 5-fold vs period 2002July 2006
Source: Thomson Innovation
Unique Proprietary Technology
R&G
Superior taste profiles thru preference mapping
Senseo
Portioned espresso
Patented honeycomb pads Sarista (patents pending)
Patented capsules
Instant
Patented aroma and processing technologies
Liquid roast
Patented aroma, packing and dosing technologies
49
Operations: First Impressions
Luc Volatier SVP Supply Chain
Luc Volatier
* |
Nationality French |
Current Position
SVP Supply Chain (2012)
Previous Experience GrandVision3 yrs Numico6 yrs
Upstream Purchasing Consulting4 yrs Danone9 yrs
Manufacturing Footprint
*2 process steps split over two locations and move to 1 in CY13
Coffee
RG Roast & Ground L Liquid I Instant
Tea
12 locations
Brazil
Thailand
Australia
A
Brazil SP 135
Netherlands Utrecht 55
Belgium 40
Poland_20_
France_20_
Netherlands Joure 20 7
Brazil Bahia 15
Spain 10
Hungary 10 3
Thailand 10
Australia <5
Greece <5
Good Fundamentals
High competency in coffee and tea sourcing
Solid manufacturing expertise and footprint
Some re-alignment and optimization has been done
Supply chain is well organized and ready for the challenge
54
Observations
Very different asset utilization rates and efficiencies
Available capacity in roasters and grinders to accommodate innovations
Some bottlenecks in specific processing and packaging
Majority of new investments will be innovation specific
Weak link between Operations and the Business
Areas for Investigation
Ways to increase speed to market
Opportunities to take further costs out
A plan to drive best practices across the organization
Concrete actions to drastically reduce working capital
A road map to develop an end-to-end holistic supply chain
Out Of Home: Living the Cafe Culture
Nick Snow COO Out of Home
Nationality British
Current Position
COO Out of Home (2006)
Previous Experience Johnson Diversey4 yrs Unilever -15 yrs
Nick Snow
58
Coffee and Tea the Largest Beverage Category Within OOH
Other
Coffee
Juices
Soft Drinks
Tea
Water
Source: European Segment Research Foodstep, Share of OOH non-alcoholic beverage categories (in %, 2011, Europe)
OOH Represents 23% of the Global Coffee Market
77%
23%
The Market is Relatively Stable
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
CAGR +3%
Source: Euromonitor OOH volumes (mln kg)
Business & Institutions are the Largest European Customer Segments
Source: European Segment Research Foodstep, volume segment split, CY11
62
Leisure & other
Petrol stations
Fast food
BaReCa
Hotels & gaming
Education
Healthcare
Business
Our OOH Business
A Profitable Solid Business
Net sales 606 614 634
Growth vLY n/a 1.3% 3.4%
Adjusted EBIT 102 109 110
Adjusted EBIT margin 16.8% 17.7% 17.3%
We are Number Three in a Highly Fragmented European Market
Unbranded
Nestle
Kraft
Lavazza
Branded Others
Source: Company data, excluding coffee shops, market share Europe in % of volume
Our Portfolio Covers all Segments of the
Coffee Categor
Espresso
Instant
Liquid Roast
Liquid Roast
Filter
Espresso
Instant
Source: Master Blenders share of coffee categories in value
Liquid Roast is our Proprietary System
High-quality coffee
Concentrated
Packed in closed7 Bag-in-Box
Deep frozen to preserve full flavour and aroma
Ready to use pack = 400 servings
Compatible only with our machines
67
It Provides Major Advantages Over Conventional Coffee Systems
Low operating cost
Consistent taste delivery
Fast dosing, high volume
No waste, limited cleaning
Simple to operate
Hygienically sealed
68
A Major Competitive Advantage for High Volume Customers
Hotels
Large business
Hospitals
Gaming
Event parks
We Have Two
Direct
Consumer brand
Liquid roast & complete portfolio Direct selling & technical service Brand synergies with retail
Scale is profit driver
Strategic partner branded or DE branded
Supply liquid roast product and equipment
Bridge to future retail presence
Liquid roast
Distributor
The Direct Model is Most Important
Distributors
Note: Distributors in this context means sales in countries where we only have distributors and no physical presence. We also sell through distributors where we have a direct business model
Source: Company data, sales split FY11
71
Direct
Distributors are More Profitable
Distributors
Note: Distributors in this context means sales in countries where we only have distributors and no physical presence. We also sell through distributors where we have a direct business model
Source: Company data, EBIT split FY11
72
Direct
The Direct Business Model
Our Business is Highly Concentrated
Denmark
Other
Australi
Spain
Belgium
Germany
Netherlands
Source: Company data
The Netherlands: Our Success Model
45% market share
65,000 customers
124,000 coffee machines
1,100 employees
250 service engineers
450 operators
200 mln DE branded cups per year
Source: POS Research Foodstep, company data
Liquid Roast 50% of Coffee Sales
in the Netherlands
Instant
Source: Master Blenders share of coffee categories in value
Liquid Roast
Espresso
Roast & Ground
We Have a Unique Operating Model
We are market leaders
We Have a Unique Operating Model
Liquid roast is our unique competitive advantage
78
Liquid Roast
We Have a Unique Operating Model
We offer a full portfolio to cover all customer needs
Full
Portfolio
79
Technical Service to ensure good quality coffee
Technical service (250 FTE)
Technical service
80
We Have a Unique Operating Model
Service organization to deep sell and provide value added services
Operating service (450 FTE)
Route sales(50 FTE)
Value-added services
81
Organization focused on the needs of OOH customers
Dedicated OOH Organization (350 FTE)
Customer
Support
We Have a Unique Operating Model
Long term customer satisfaction creates loyalty
High Customer Satisfaction & Retention
83
40% of Sales is from Value Added Services
Coffee & tea Accessories Equipment & Operation &
spares technical service
Source: Company data, indicative split of sales NL
84_
Strong OOH Company Supports Brand Awareness in the Netherlands
The Distributor Model
We Have Four Major Strategic Distributor Partners
Source: Company data
Our Distributor Model Serves
Three Goals
Leverage liquid technology to drive profitability
Create a network of strategic partners
Create brand presence in countries where we do not have a retail brand
88
UCC our Strategic Partner in Japan
Leading branded Coffee Company
|
€ 1 bn sales |
Highly innovative coffee market
We provide:
Liquid roast ingredient & machines
Sales & technical training
Key account support
Marketing assistance
Source: Company data, company website, Factiva, D&B,
89
Using Distributors for Brand Visibility -
Example Turkey
Two distributor partners
Non coffee roasters
Complete portfolio
Leader in 5 star hotels and resorts
Building DE brand
90
Going Forward
Further Innovate our Liquid Roast Technology
Upgrade our Liquid Roast quality to match espresso taste
Further deploy ambient Liquid Roast to increase distribution and open new channels
92
Strengthen Quality Perception
Upgrade equipment design and appearance existing park
Innovate consumer interface
93
Use OOH Touch Points as Brand Building Tool
Brazil
Spain
94
Grow our Business Geographically
Selectively drive scale in countries with retail presence
Look for further distribution opportunities
95
France: The Growth Engine of W-Europe
Luc Van Gorp GM France
Luc Van Gorp
Nationality Belgian
Current Position GM France (2010)
Previous Experience Sara Lee9 yrs Campbells-4 yrs Diageo3 yrs
2 |
Facts About France
63.1 mln citizens
27.2 mln households
2.3 persons per household 3.9 cups of coffee per day
Source: INSEE, Government of France, Liquid intake monitor
98
Third Largest Coffee Market in Europe
4,874
2,920
2,472
1,627
1,244
Germany Russia France Italy UK
Source: Euromonitor retail sales (fixed 2011 exchange rates), € mln
99
Room to Grow in Terms of Consumption
Daily cups per consumer
8.3
7.0
6.2
5.2
5.0
4.1
4.0
3.9
3.8
3.6
3.3
3.3
3.1
2.8
2.7
2.6
2.5
2.5
Source: Company analysis based on U&A, Euromonitor, ABIC and company estimates
100
A Growing Market
100
103
106
113
127
2007 2008 2009 2010 2011
Source: Nielsen 2011, Retail sales, € mln
101
Market Growth is Driven by Single Serve
Avg. Price / kg
% market
2011 vs 2006
Single Serve caps
€28.00
17%
+36%
Single Serve pads
€15.40
22%
+15%
Premium R&G
€10.80
46%
+1%
Mainstream R&G
€5.30
15%
+1%
Source: Nielsen, value share CY11
The French have a Distinctive
Coffee Culture
48% drink coffee black
37% drink coffee black with sugar
Indulgence and energy are main consumption drivers
56% of Roast & Ground is consumed in the morning
63% of Single Serve is consumed in the afternoon
66% of households has both R&G and Single Serve appliance
103
A Highly Branded Market
Other
PL
Nestle
Kraft
MASTER
BLENDERS
Source: Nielsen retail value shares CY11
104
13%
21%
17%
12%
37%
France
MASTER
BLENDERS
Our Portfolio in 2009
Roast & Ground
Single Serve
Private label
Mainstream
Premium
Pads
106
Strategic Decision to Unlock French Market Growth Potential
The 3 strategic pillars to take full advantage of the great French market opportunity :
Premiumize Roast & Ground
Significantly grow Single Serve
Step up Senseo
Create super premium portioned espresso in retail
Improve our trade approach
107_
Premiumize Roast & Ground
Exit Private Label manufacturing
Stabilize our mainstream Maison du Cafe business
Grow premium LOr brand
LOr Premium Business Growth
Introduce innovations: LOr Elixir
Consistent advertising with strong ownable codes
Qualitative in store promo to stimulate multiple LOr purchases
109
LOr In Store Activation
110
Impressive Results for LOr R&G
FY09-FY11 Results
2% volume growth
12% sales growth
Record high market share of 14.3%
Source: Company data, Nielsen retail value share MAT Jan 2012
111
Significantly Step Up Senseo
Strategy:
Aggressively build appliance-park penetration
Extend portfolio
Focus communication on indulgence & quality
112
Aggressively Build Appliance Penetration
Limited editions
Strong consumer activation
Demos
Tastings
Consumer advertising
Strong cooperation with Philips France
113
Christmas 2011 Limited Edition
Senseo
114
Sneak Preview: Limited Edition Mothers Day 2012
115
Strong Results in Appliance Penetration
Leading Single Serve appliance with 34% penetration
10% penetration increase in 2011
Record high sales in 2011:1.2 mln appliances
9 mln appliances sold
since launch in 2002
34%
12%
9%
4%
116
Significant Portfolio Innovation
Launch FY10 FY10 FY11 FY11
Consumer Heavy Pure Premium Sustainable
need user loyalty indulgence Black range development
117
Key Advertising Messages
Focus on indulgence and trust
Not on convenience
Build on appliance news
118
Impressive Results in Senseo Coffee Sales
FY09FY11
18% volume growth
23% sales growth
Senseo already 30% of Single Serve category
Source: Company data, Nielsen retail value share, MAT Jan 2012
119
Create Retail Portioned Espresso Category
Use strong LOr equity as brand platform
Super Premium price positioning
>200% premium vs retail capsules
Only 10% price discount vs Nespresso
No trade promos / no price deals
Swiftly extend portfolio
Successful Launch
95% distribution in four weeks
4% penetration after 6 months
Brand awareness at 87% after 6 months
Market share 10% of single serve
Best Innovation 2010 Nielsen nomination
Source: Company data 2010, Kantar 2010, Nielsen MAT Jan 2012
121
Successful Portfolio Roll Out
October 2011:
Lungo and Strong
May 2011:
Premium range
February 2011:
Extension of base
April 2010:
Base Range
122
LOr Espresso Shows Significant Constant Growth Since Launch
LOr Espresso sales growth (indexed)
236
Apr 10-Aug 10 Sep 10-Feb 11 Mar 11May 11 Junll-Octll Nov 11Feb 12
236
206
177
147
100
Source: Company data
123
Excellent Point of Sale Execution
Improve Our Trade Approach
Shopper marketing
Category Captain for Single Serve in all customers
Central and field sales people driven by value and margin
Optimized price & promotion management
Results of Our Strategy
Reached Record Market Share Levels
CAGR+6%
21.2
20.0
18.8
19.1
18.5
2007 2008 2009 2010 2011
Source: Nielsen, Value Share CY11
Significantly Improved Volume Mix
k Tons
35.4 363 363 35.8
Premium Mainstream
FY07 FY08 FY09 FY10 FY11
Source: Company data base on GAAP
Premiumization Driving Growth
Sales and margin improvement
Achieved with a stable 9% A&P/Sales
296
247
231 233
Sales € mln 205
Premium Mainstream
FY07 FY08 FY09 FY10 FY11
Source: Company data, based on US GAAP
129
NL: A Multi-Tier Strategy in Action
Harm-Jan van Pelt Regional COO
Sm
Nationality Dutch
Current Position Regional COO
Previous Experience Sara Lee -13 yrs Henkel9 yrs
Harm-Jan van Pelt
Facts About The Netherlands
16.7 mln citizens
7.5 mln households
2.2 persons per household
Source: CBS
Dutch Coffee and Tea Culture
4.5 cups of coffee per day
70% is in home consumption
40% of coffee drinks are pure black
47% with milk
40% of all coffee consumption is in the morning
3.1 cups of tea per day
80% is in home consumption
67% of consumers drink pure tea
Important moments: breakfast 25%, afternoon 30%
Source: Liquid intake monitor
The Coffee Market is Diversified
includes all Single Serve except Espresso Capsules which are shown separately Source: Nielsen, value share, total coffee market incl. instants, total tea market, CY11
134
Instant
Espresso Capsules
Roast & Ground
Beans
Single Serve1
The Tea Market is Segmented
Source: Nielsen, value share, total coffee market incl. instants, total tea market, CY11
Well Being Tea
Black Tea
Pleasure Tea
Coffee is a Growing Market
FY07 FY08 FY09 FY10 FY11
Source: Nielsen, € mln
546
572
612
619
676
CAGR +5.5%
Tea is a Growing Market
104
109
119
CAGR+4:2%
125
123
FY07 FY08 FY09 FY10 FY11
Source: Nielsen, € mln
Our Business
Tea
Instant 1% 1%
Capsules ^% Beans
Senseo
Roast & Ground
We are Present in all Segments
Roast & Senseo Beans Capsules Instant Tea
Ground
Source: Master Blenders share of categories in value, FY11, non-core category excluded 139
We Have a Very Strong Market
Position in Coffee
Private Labels
Other
Nestle
Source: Nielsen, FY11
We Have an Equally Strong Market
Private Labels
Other
Wessanen
Unilever
Source: Nielsen, FY11
Position in Tea
Flat Sales Development over Last Five Years
100 101 99 101
FY07 FY08 FY09 FY10 FY11
Sales The Netherlands (indexed)
Source: Company data, based on US GAAP
Company was Managed for Profit
Lowered A&P spend
Stopped investment behind Senseo
No innovations or big introductions
Limited in store and consumer activation
Market Shares have only Declined Slowly
Coffee
52.7%
51.3%
50.1%
48.6%
58.5%
Tea
55.0%
53.8%
52.9%
FY08 FY09 FY10 FY11 FY08 FY09 FY10 FY11
Source: Nielsen, value share, total coffee market incl. instant, total tea market
Why We Still Have a 50% Market Share
Strong Brands
High Loyalty
Social Connectivity
Douwe Egberts is the Fourth Strongest
Brand in the Netherlands
Brand Asset Valuator 2011
1. Google
2. IKEA
3. Coca-Cola
^4. Douwe Egberts _
5. Eftellng
6. Albert Heijn
7. Marktplaats,nl
8. Philips
9. Bol.com
10. |
Microsoft |
Douwe Egberts is the Third Most Sold Brand in Retail
*1 Campina
*2
Marlboro
*3 Douwe Egberts
*4
Coca-Cola
*5
Heineken
#27 Nescafe
#43 Pickwick
Source: GfK, supermarket sales in the Netherlands € mln
147
We Have a Strong Savings Program that Has Driven Loyalty Since 1924
Loyalty points on all DE and Pickwick products
65% of Dutch households collect our loyalty points
Points can be reimbursed for coffee & tea related products
148
Consumers Visit our Shops to Collect Gifts
75% of all points redeemed
People collect their gifts at our 13 stores
Result: 550,000 qualitative consumer contacts per year
Website www.de.nl takes 11% of total gifts
149
Our Consumers are Very Loyal
150
Loyalty %
51
56
46
23
31
32
Coca Cola
Pepsi
Heineken
Grolsch
Source: GfK
Participation is a Cornerstone of
Douwe Egberts
Douwe Egberts Neighbors day connects communities
Brings people together to activate their neighborhood
1.3 mln participants
Sales up 6% vs last year
Sponsorship at large events
150,000 youngsters
300,000 cups of coffee sold
23
2011 Changing Course
Strategic Decision to Bring Back Growth
Change Culture
Focus on value added offerings and innovation
Premiumization
Increase marketing support
25
Major Turnaround in Culture
Full replacement of Dutch leadership team
Inject sense of urgency, accountability and entrepreneurship in the team
Focus on profitable growth and market share
Innovate Tea: Introduced Spices Segment
Developed a new premium tea segment
with a surprising taste Launch date: October 2011
Results:
Total market share 9.3% for new Pickwick segment
2.9% market share new variants only
Source: Nielsen, week 4 CY12
Launched Dutch Blend
Premium Black Tea, co-created with consumers
Launch date: October 2010 Results:
Black tea segment +4.1% m.s.
Total tea market +1.3% m.s.
Source: Nielsen, week 4 CY12
Coffee: Launched Portioned Espresso
New retail segment
Launch date: April 2011 Results:
Awareness 77%
Market share 5.5% in Single Serve segment in one year
Source: Nielsen, week 4 CY12
100% ARABICA
10
CAPSULES
Introduced a New Senseo Fresh Milk-Based Machine
New Senseo innovation with fresh milk compartment in machine to make cappuccino
Launch date: November 2011
Results:
Total machine sales December 2011 + 50% vs. 2010
158
Source: Company data
Premiumized Coffee: Douwe Egberts Beans
Beans is the fastest growing segment: +54% vs LY
Premium Douwe Egberts beans, specially selected for the true coffee connoisseur
+20% cons, price difference
Activation date: December 2011
Source: Nielsen and Company data
159
Strengthened Category Leadership
Introduced shopper marketing into the company
We increased category leadership in the 4 main retailers
To work jointly in driving category growth
160
Rejuvenate DE Cafes
25 DE cafes
Use cafes to activate innovations
Restyle in line with new brand image
Rollout in mainstream areas
Acquired
35 cafes
Connect with early coffee adopters
Use as laboratory for new coffee experiences
Leverage knowledge base for new innovations and customer insights
Company
Coffee
Initial Signs of Recovery
Coffee
Tea
FY08 FY09 FY10 FY11 FY12 FY12 FY08 FY09 FY10 FY11 FY12 FY12
Ql Q2 Ql Q2
Source:Nielsen, value share, total coffee market incl. instant, total tea market
52.7%
51.3% _ 50.1%
48.6% 48.6% 48.8%
58.5%
55.0% 53% 5290/o 53.3%
2012: The Year of Acceleration
Our Strategic Objectives
Become the launch platform for all product innovations
Become the preferred supplier for 100% of the trade
Utilize our unique loyalty system to create a one-on-one relationship with our consumers
Use the coffee cafes as an innovation laboratory
39
March April Sept Oct
2012 2012 2012 2012
Brazil: Focus on Profitable Growth
Dantes Hurtado GM Brazil
Dantes Hurtado
* |
Nationality Brazilian |
Current Position GM Brazil (2003)
Previous Experience Best Foods2 yrs Philip Morris3 yrs Unilever24 yrs
Brazil is Five Countries in One
North Pop.: 16 mln $6,960/capita,
West Pop.: 14 mln $13,910/capita
Northeast Pop.: 78 mln $6,690/capita
SP AND RIO * Pop.: 58 mln $16,150/capita
! South Pop.: 28 mln $12,460/ca pita
4,400 km
Source: IBGE 2010 Census and Company Estimates
Sao Paulo and Rio are 44% of the Economy
North
Northeast
SP&Rio
South
Source: IBGE 2010 Census and Company Estimates
West
The Brazilian Coffee Market
USA Germany Brazil Japan Russia France
Brazil is the Third Largest Coffee Market
$bn
9.1
6.9
6.6
5.4
4.1
3.5
Source: Euromonitor 2011
Growing Steadily
Coffee Consumption (billions of cups)
98
165
236
CAGR+3.6%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Source: ABIC 2011
With Potential for Further Growth
Daily cups per consumer
Source: Company analysis based on U&A, Euromonitor, ABIC and company estimates
8.3
7.0
6.2
5.0
4.5
? 4.1 4.0
3.8 3.6
Li 3.3. 3.1
2.8 2.7 2.6 2.5 2.5
Coffee is Part of our Daily Routine
95% of people drink coffee
Children drink coffee with milk from the age of 3
40% of total coffee is consumed during breakfast
50% with milk
91% with sugar
Source: U&A study
We Drink Mainly Roast and Ground
Instant Beans
Single Serve
Roast & Ground
Source: Nielsen 2011, retail sales value
Roast and Ground is Premiumizing
Premium 6.70 11% +22%
Mainstream 5.20 83% +1%
Economy 4.40 6% (33)%
Source: Nielsen 2011, R&G coffee value share
Four Large Players and Many Locals
Other
(1,200 players)
Source: Nielsen 2011, Retail value share
Leaders are Geographically Focussed
Source: Nielsen 2011, total coffee value share
SP and Rio South and SP Northeast and
Metro Inland Others
(46%) 21% 9%
20% 7% 28%)
12% (19%) 2%
4% 10% 5%
Brazil
MASTER
BLENDERS
Our Brand Portfolio
Source: Company data
182
Do Ponto Others
Caboclo
Damasco
Moka
Pilao
Pilao is the Biggest Coffee Brand in Brazil
The strong coffee of Brazil1
15% national share (40% in SP and Rio)
55% top of mind
47% loyalty
10% premium price
PIIAO
O Cafe Forte
Caboclo: Tradition and Heritage
The country flavor in your home
5th largest brand
7-8% in Sao Paulo and South
Since 1930
Damasco: A Valuable Acquisition
Acquired November 2010
To strengthen the presence in the South
Leader in Parana state (40% of the South)
10% premium price
OOH presence
Presence Across Regions and Segments
SP and Rio SP Inland and Northeast and
Metro South Other
Premium
Mainstream
Economy
State of the Art Factory in Jundiai
Operating since 2006
One of the largest coffee factories in the world
135,000 tons/year
High technology equipment
ISO 14.000 certified
Process will be carbon neutral as of Apr12
100
110
126
127
135
Organic: +4%
With acquisitions: +8%
Our Sales are Growing
FY07 FY08 FY09 FY10 FY11
Source: Company data, in BRL, indexed, based on US GAAP
Our Mainstream is Growing
Net Sales
Premium
Mainstream
Economy
FY07 FY08 FY09 FY10 FY11
31% 27% 28% 27% 24%
Note: Acquisitions excluded
Source: Company data, in BRL, based on US GAAP
65%
69%
69%
70%
74%
Our Strategy
Focus growth on Sao Paulo and Rio Metro Maintain position in the rest of the country
Sao Paulo and Rio Metro are the Most Affluent Areas
Highest income region
Population 32 mln, with 40% AB class
Higher prices than average (111 Rio, 102 SP)
Pilao grew 2x faster than the market over the last 3 years
191
50% of our sales
Higher margins
Sao Paulo and Rio Metro are Important and Profitable for us
SP and Rio SP Inland Northeast
Metro and South and Others
GP index 100 88 65
Strategy for Sao Paulo and Rio Metro
Fortify the Economy range
Launch value added propositions and premiumize
Innovate, starting with Senseo
Extend presence in Out of Home
Take trade to the next level
Fortify the Economy Range
Position range correctly against price competition
Rebuild distribution
Get fair share of shelf space
Started Launching Value Added Line
Extensions
Mild and more aromatic Ideal for the summer season Launched October 2009
Intense and extra-dark Strengthens brand positioning The strong coffee of Brazil Launched March 2010
Innovation: SP and Rio, the Perfect Region for Senseo
Single Serve starting to emerge
Nespresso and Dolce Gusto already launched
4.4 mln high income households (Sao Paulo and Rio metro)
Smaller (3.3 persons/HH) family size seeking convenience
196
Senseo: Full Roll-Out in 2013
Encouraging market test results
62,000 machines during test period
56% definitely buy intention
High output per machine
Capturing critical breakfast consumption
Price/cup 9x higher than regular coffee
Extend Presence in OOH
Three pillars:
Liquid roast
Espresso operating servic
Branding
Drinking experience
Selective M&A
Liquid Roast as our Entry Point
Pilao Cafitesse in leading hotels
CAFITESSE
I
FASANO
S O F I T E L_
luxury hotels CuarujA Jequitimar
O Sol Mel id
HOTELS & RESORTS
HOTELS & RESORTS
ES rANPJ .AZA
HOEtllfilmm AlITi Br killtil*.
ATLANTIC A
HOTFLS I NTFR NATIONAL
NOVOTEL
GOLDEN TULIP
HOTfLS . SUITES ? RESOHTL
199
Building Pilao Presence in Padarias
Espresso in 156 padarias
Building Pilao Presence in Coffee Shops
91 coffee shops
Taking Trade Management to the Next Level
From category captain to shopper marketing expert7 at WalMart, Carrefour and Casino
Leverage our Cash & Carry position to expand national distribution
Perfect store program
A Perfect Store
Like France in 2000
We are.
refreshing and premiumizing our R&G base
launching Senseo
building strong trade partnerships
. while developing an OOH presence
Australia: An Instant Success Story
Lara Brans GM Australia
Nationality Dutch
Current Position GM Australia (2007)
Previous Experience Sara Lee -10 yrs VODW Marketing6 yrs
206
Lara Brans
Our Instant Success Story Down Under
Coffee market
Our business & brands
Growth strategy
Our results
Facts About Australia
22.8 mln citizens
8.6 mln households
2.6 persons per household
Moderate Coffee Consumption
Daily cups per consumer
Source: Company analysis based on U&A, Euromonitor, ABIC and company estimates
Mainly an Instant Coffee Market
Source: Aztec Scan Data 2011
210
81%
19%
A Unique Coffee Culture
In home:
55% of coffee consumption is in the morning
83% drink coffee with milk and 67% with sugar
Source: Company data
A Unique Coffee Culture
Out of Home:
Emerging boutique coffee cafes
A Growing Coffee Market
2005 2006 2007 2008 2009 2010 2011
Source: Aztec Scan Data Jan 2012, AUD mln
573
652
693
767
835
835
868
CAGR~
A Concentrated Branded Market
Source: Aztec Scan Data Jan 2012, Value Shares
Cantarella Group
Nestle
Other
PL
The Instant Market is Premiumizing
Avg. CAGR
% market
Price/cup 20022011
Single serve mixes $ 0.37 25% +24.8%
Premium $0.16 35% +11.7%
Mainstream $0.10 34% (0.3)%
Economy $0.06 6% (6.3)%
Source: Aztec Scan Data Jan 2012, AUD
Australia
MASTER
BLENDERS
Harris: our Mainstream R&G Brand
from Down Under
12% of sales
17% market share R&G
Australian heritage
Locally roasted
Over 128 years old
Source: Company data, Aztec Scan Data Jan 2012
Moccona: the Premium Instant Brand
from Europe
88% of sales
29% instant market share
European heritage
Iconic jar
10% price premium
Imported from NL
High loyalty 52%
Source: Aztec Scan Data Jan 2012, Company data
218
We were a Small Player 11 Years ago
Nescafe market leader
Little differentiation and variety in market
Mainly lower quality coffees
Moccona offered two qualities: mainstream and premium
Source: Aztec Scan Data Jan 2012, Moccona value share of the instant market CY99
Our Growth Strategy: Drive Value and Increase Margins
Premiumization
Focus on better quality coffee
Value growth
Margin focus
Trading consumers up in $/cup
We Extended and Premiumized
our Portfolio
Base range
Every Day Classic
AUD 14 cts/cup 3 variants
We Extended and Premiumized
our Portfolio
Base Inspirations
range range
AUD 14 cts/cup AUD 15 cts/cup 3 variants 3 variants
Every Day Classic
Escape
We Extended and Premiumized
our Portfolio
Base Inspirations Gourmet
range range range
AUD 14 cts/cup AUD 15 cts/cup AUD 21 cts/cup 3 variants 3 variants 3 variants
Every Day Classic
Escape
Indulgence
We Extended and Premiumized
our Portfolio
Base Inspirations Gourmet Mixes
range range range range
AUD 14 cts/cup AUD 15 cts/cup AUD 21 cts/cup AUD 51 cts/cup 3 variants 3 variants 3 variants 11 variants
Every Day Classic
Escape
Indulgence
Your Moment
We Built Strong Trade Relationships
Effective pricing & promotional management
Thorough promotional analysis
Established partnerships with top 3 customers, driving growth via joint customer plans
coles
Woolworths
We Claimed Category Captain Position
Credible coffee experts across all segments
Leverage on premium brand positioning
Extensive shopper insights translated into shelf navigation tools and displays
226
We Build Very Consistent Brand Positioning
1989: Rolls
2009: Cinderella
2012: Key
Our Results
Double-Digit Top-line Growth with Consistent High Margins
FY06 FY07 FY08 FY09 FY10 FY11
Source: Company data, indexed sales, based on US GAAP
100
116
124
147
160
171
CAGK ,__+11.3%^
Growth Through Premiumization
100
116
124
147
160
171
Premium
Mainstream
FY06 FY07 FY08 FY09 FY10 FY11
Source: Company data, indexed sales, based on US GAAP
Strong Market Share Development
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Aztec Scan Data Jan 2012, value shares
13%
23%
The Way Forward
Keep Momentum Going
Keep leadership in premium instant
Continue to add local & global innovations
Continue to claim category captainship as coffee expert
Extend Premiumization into R&G
Extend into upper premium R&G
Launch of our OOH Piazza dOro cafe brand into Retail
Leverage OOH & Retail
SERVED IN ALL GOOD CAFES.
AND NOW IN ALL GOOD HOMES
Notes
Notes
Notes
Notes
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